Competition Commission Revises Position on Sky Movies

LONDON: With Netflix’s arrival in the U.K. and LOVEFiLM expanding its slate of offerings, the Competition Commission has revised its findings on the pay-TV market for movies, asserting that Sky Movies no longer provides the Sky platform with a "material advantage" over its competitors.

In August 2011, the competition authority issued a report in which it stated that Sky’s control over movie rights in the U.K. was restricting competition in the pay-TV market. The Commission said it would monitor developments in the pay-TV space. Since then, the Commission says, Netflix and LOVEFiLM have provided consumers with alternatives for renting for movies. Further, Sky is launching its own Internet-based offering this summer, Now TV, which will offer access to Sky Movies without consumers needing to sign up for the entire Sky pay-TV bundle.

The Commission notes that Sky does hold the rights to movies from all six Hollywood studies for the first subscription pay-TV window, but that Netflix and LOVEFiLM have managed to nab the first pay-TV window for titles from several independent studios. The services have also been able to secure second pay-TV window rights to titles from the major studies.

The Competition Commission has also changed its position on the importance consumers attach to shorter windows for movies; a diversity of offerings and price are as important, if not more so, than a short window between theatrical and television release, the authority says.

"Competition between providers of movie services on pay TV has changed materially and, as a result of these changes, consumers now have much greater choice," said Laura Carstensen, chairman of the Movies on Pay TV market investigation. "LOVEFiLM and Netflix offer services which are attractive to many consumers and they appear sufficiently well resourced to be in a position to improve the range and quality of their content further. Moreover, Sky is about to offer Sky Movies on Now TV, which will make Sky Movies available unbundled from other pay-TV content and not requiring a subscription to a traditional pay-TV platform."

Carstensen continued, "For the purposes of our inquiry, the key effect of the market developments is that, as a result of the new options available to them, consumers’ choice of pay-TV platform can more easily be decoupled from their choice of pay-TV movie service. As a result, Sky Movies no longer provides Sky with the advantage that it used to when competing with other traditional pay-TV platforms, like Virgin Media or BT Vision. Given that we no longer find there to be an adverse effect on competition in relation to movies on pay TV, we are not now proposing any remedial action."